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Time Horizon, Objective Function, and Uncertainty in a Multiperiod Model of Firm Growth

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  • Jean-Marc Boussard

Abstract

The growing literature pertaining to multiperiod programming models of farm growth raises three problems that are ordinarily solved with makeshift solutions: the duration of time to be included within the planning horizon; the arbitrage between present and future consumption; and the introduction of uncertainty. The connections between these questions are shown. The net worth of the firm at the end of the planning horizon is maximized under the constraint of a linear consumption function. In this case it is possible to use the turnpike theorem and some additional theorems on separability of matrices to derive a simple rule for deciding on the appropriate length of planning horizon. The introduction of uncertainty shortens the practical planning horizon defined according to this rule.

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  • Jean-Marc Boussard, 1971. "Time Horizon, Objective Function, and Uncertainty in a Multiperiod Model of Firm Growth," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 53(3), pages 467-477.
    • Handle: RePEc:oup:ajagec:v:53:y:1971:i:3:p:467-477.
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    Citations

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    Cited by:

    1. Kolajo, Ebenezer F. & Martin, Neil R., Jr., 1987. "Farm Firm Decisions Modeling: A Methodological Evaluation Of Alternative Farm Growth Modeling Approaches," 1987 Annual Meeting, August 2-5, East Lansing, Michigan 269948, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Baker, Chester B., 1974. "An Economic Alternative To Concessional Farm Interest Rates," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 18(3), pages 1-22, December.
    3. Brake, John R. & Melichar, Emanuel, 1977. "Agricultural Finance and Capital Markets," A Survey of Agricultural Economics Literature, Volume 1: Traditional Fields of Agricultural Economics 1940s to 1970s,, Agricultural and Applied Economics Association.
    4. Walker, Odell L. & Hardin, Mike L. & Mapp, Harry P., Jr. & Roush, Clint E., 1979. "Farm Growth And Estate Transfer In An Uncertain Environment," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 11(1), pages 1-12, July.
    5. Griffith, Garry & Alford, Andrew & Davies, Llyod & Herd, Robert & Parnell, Peter & Hegarty, Roger, 2004. "An Assessment of the Economic, Environmental and Social Impacts of NSW Agriculture’s Investment in the Net Feed Efficiency R,D&E Cluster," Research Reports 280780, New South Wales Department of Primary Industries Research Economists.
    6. Shumway, C. Richard & Talpaz, Hovav, 1977. "Verification of Linear Programming Solutions, with Emphasis on Supply Implications," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 9(2), pages 1-8, December.
    7. Boussard, Jean-Marc, 1985. "Changing Environment and Structural Heterogeneity in Agriculture," 1985 Conference, August 26-September 4, 1985, Malaga, Spain 182616, International Association of Agricultural Economists.
    8. Jean-Marc Boussard, 1985. "La production agricole répond-elle aux prix ?," Économie rurale, Programme National Persée, vol. 167(1), pages 20-27.
    9. Alford, Andrew R. & Griffith, Garry R. & Cacho, Oscar J., 2003. "A Northern Tablelands Whole-Farm Linear Program for Economic Evaluation of New Technologies at the Farm-Level," Research Reports 28010, New South Wales Department of Primary Industries Research Economists.
    10. Nuthall, Peter L., 1980. "A Survey of Methods for Determining A Planning Horizon," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 48(01), pages 1-15, April.
    11. Reid, Donald W. & Musser, Wesley N. & Martin, Neil R., Jr., 1978. "Income Tax Aspects Of Liquidation In Multiperiod Linear Growth Models," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 10(2), pages 1-6, December.
    12. Braford, Garnett L. & Reid, Donald W., 1984. "A Mathematical Programming Decision Model For Farm Machinery Replacement: A Conceptual Specification," 1984 Annual Meeting, August 5-8, Ithaca, New York 279091, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. Flichman, Guillermo & Donatelli, Marcello & Louhichi, M.K. & Romstad, Eirik & Heckelei, Thomas & Auclair, D. & Garvey, E. & van Ittersum, Martin K. & Janssen, Sander J.C. & Elbersen, Berien S., 2006. "Quantitative models of SEAMLESS-IF and procedures for up-and downscaling," Reports 9297, Wageningen University, SEAMLESS: System for Environmental and Agricultural Modelling; Linking European Science and Society.
    14. Jean-Marc Boussard, 2000. "Agriculture, équilibre général et OMC," Économie rurale, Programme National Persée, vol. 257(1), pages 3-16.
    15. Claude Reboul, 1984. "Evaluation du coût d'emploi de la main-d'œuvre familiale sur une exploitation agricole. Contribution méthodologique," Économie rurale, Programme National Persée, vol. 161(1), pages 15-23.
    16. Baker, C.B. & Barry, Peter J. & Lee, Warren F. & Olson, Carl E. & Hochman, Eithan & Rausser, Gordon S. & Kottke, Marvin W., 1977. "Economic Growth of the Agricultural Firm," Western Region Archives 260636, Western Region - Western Extension Directors Association (WEDA).
    17. Schoney, R. A., 1990. "An Analysis of Wheat Supply Response Under Risk and Uncertainty," Working Papers 244030, Agriculture and Agri-Food Canada.
    18. de Haen, H., 1976. "Kapitalbildung und privater Konsum von Landwirten bei unsicheren Einkommenserwartungen," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 13.
    19. Louhichi, Kamel & Flichman, Guillermo & Blanco Fonseca, Maria, 2009. "A generic template for FSSIM," Reports 57463, Wageningen University, SEAMLESS: System for Environmental and Agricultural Modelling; Linking European Science and Society.
    20. Martins, M. Belem & Marques, Carlos, 2007. "Methodological aspects of a mathematical programming model to evaluate soil tillage technologies in a risky environment," European Journal of Operational Research, Elsevier, vol. 177(1), pages 556-571, February.
    21. Brake, John R. & Melichar, Emanuel, 1977. "PART VI. Agricultural Finance and Capital Markets," AAEA Monographs, Agricultural and Applied Economics Association, number 337218, january.

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